|Public limited company|
|Traded as||LSE: OCDO|
|England and Wales|
|Services||Groceries, consumer goods|
|Revenue||£1,756.6 million (2019)|
|£(92.8) million (2019)|
|£(211.8) million (2019)|
Ocado is a British online supermarket that describes itself as 'the world's largest dedicated online grocery retailer'. In contrast to its main competitors, the company has no chain of stores and does all home deliveries from its warehouses. The company was floated on the London Stock Exchange on 21 July 2010, and is a member of the FTSE 100 Index.
Ocado was founded in April 2000 as L.M. Solutions by Jonathan Faiman, Jason Gissing and Tim Steiner, former merchant bankers with Goldman Sachs. In October 2000, Ocado partnered with Waitrose. In June 2001, the company changed its name to Ocado Limited. In 2002, the company started its commercial delivery service.
In September 2006, Michael Grade became non-executive chairman of Ocado, shortly after Goldman Sachs were appointed as financial advisers, fuelling speculation which had already started about a listing for the company. In November 2008, the John Lewis Partnership transferred its shareholding of 29% into its staff pension fund. In May 2010, the John Lewis Partnership entered into a 10-year branding and supply agreement with Ocado. In February 2011, the John Lewis pension fund sold off its entire Ocado shareholding.
On 13 July 2009, Ocado released its first app for the iPhone. The app, called 'Ocado on the Go', allowed users to do their grocery shopping without a computer. On 19 April 2010, the company extended the app to Android devices. In 2015, Ocado launched the first grocery app for the Apple Watch.
In 2015, Ocado launched the Ocado Smart Platform, its own software for operating retail businesses online.
In August 2017, Ocado launched an app for Amazon’s Alexa voice assistant, that allowed users to add products to an existing Ocado order or basket via voice command. The company stated it was the first UK supermarket to launch an app for Alexa.
In January 2018, Ocado completed negotiations for an Ocado Smart Platform deal with the Canadian supermarket chain Sobeys, owned by Empire Company. Michael Medline, CEO of Empire and Sobeys, said its e-commerce business, including robotics system for home deliveries, would start in approximately two years.
In May 2018, Ocado signed an Ocado Smart Platform deal with Kroger, the US retail company, to build up to 20 Customer Fulfillment Centres (CFCs) using Ocado's automated technologies. As of November 2019, five locations had been identified for the new CFCs, and two were under construction.
On 5 February 2019, Ocado's customer fulfilment centre (CFC) in Andover, Hampshire, which handles 10 per cent of its fulfilments, caught fire. The fire continued to burn the following day, engaging more than 25 fire engines and 300 firefighters from multiple fire services. A 500-metre exclusion zone was set up and residents as far as 1.6 km away were evacuated as a precaution. The fire burned for more than 3 days, with the roof collapsing in the process.
On 27 February 2019, Ocado and Marks and Spencer announced a Joint Venture, whereby M&S acquired a 50% share in Ocado's UK retail business.
In March 2020, Ocado warned of delays as customers were buying particularly large orders amid reports of panic-buying across the UK over fears of the coronavirus pandemic. On 18 March, Ocado announced that it was suspending its service, citing higher demand for deliveries than it was able to meet. On 29 March, the company said that they had spent £1.5 million on ordering 100,000 COVID-19 testing kits for its staff, with an aim to keep grocery supplies flowing. This was intended to protect both their staff and the UK public, but the company promised to hand them over to the NHS if required.
Ocado's products include own brand groceries from the Marks and Spencer supermarket chain as well as their own Ocado brand, but also a selection of name brand groceries and other items, including flowers, toys and magazines. Until September 2020, Ocado sold Waitrose products alongside their own, however, the 10-year supply and branding deal signed in 2010 expired and Ocado began a joint venture with Marks & Spencer instead. Deliveries were temporarily suspended following a "surge in demand" when the venture was first announced.
Since January 2014, Ocado have provided the website, warehousing and delivery services for one of their main grocery rivals Morrisons supermarkets, allowing them to operate online using Ocado's network of depots to deliver Morrisons groceries to online customers. The fulfilment of Morrisons.com grocery website customer orders comes from Ocado’s Dordon Customer Fulfilment Centre (CFC) in the Midlands, with deliveries brought to the customer's doorstep via Morrisons liveried fleet. Morrisons made an initial capital payment of up to £170m to Ocado to acquire the Dordon site and associated mechanical handling equipment, as well as a licence and integration fee. A further £46m was invested to expand Dordon in order to accommodate Morrisons range, integrate with Morrisons systems and establish a network of delivery spokes. On an annual basis, Morrisons pay service costs and a contribution to research and development expenditure.
Ocado Technology, a division of Ocado Group, designs most of Ocado's technology in-house, including but not limited to: website and apps; automated warehouses and robots; Machine Learning-based fraud detection and customer service systems; forecasting and routing systems. They describe themselves as specialists in: automation and robotics; big data and the cloud; web and app development; algorithms and smart optimisation; and discrete event-simulation.
Ocado's warehouses are built with a giant 3D grid structure inside, within which groceries are stored in crates. On top, robots (over 1,000 per warehouse) coordinate in swarm-like behaviour to collect and move the crates. The robots bring the crates up from the grid into their interior and take them to pickers so the groceries inside the crate can be packed into orders. They then move the crate back into the grid. The robots can work together to 'dig' for the crates, moving crates out of the way to collect one buried lower in a stack. The movement of the robots and the storage location of the crates is managed and optimised by a central 'control system' using Artificial Intelligence. In this way, Ocado can pick a 50 item order in minutes.
These 'hive' style warehouses are located in Andover and Erith. The Erith site is 36 acres, capable of processing 220,000 orders a week, with up to 3,500 robots running on its grid. Ocado's older warehouses, located in Hatfield and Dordon, are based on a complex conveyor system and use Artificial Intelligence to plan and optimise picking sequence, product location, and crate routing.
Ocado Technology was involved in two EU-funded Horizon 2020 robotics research projects: SecondHands and SOMA and continues to experiment with robotics for automating picking and packing of grocery orders.
Ocado Smart Platform
The Ocado Smart Platform is Ocado's hardware and software platform for operating retail businesses online. It is this side-step from being a UK grocer into becoming a global technology provider that has seeded some analysts predictions of a £100 share price by 2030 Clients include the following supermarket chains: Morrisons (UK); ICA (Sweden); Group Casino (France); Sobeys (Canada); Kroger (USA) and Bon Preu (Spain).
Jez Frampton, CEO of Interbrand and non-executive director of Ocado, claims the name "Ocado" is "a made-up word, intended to evoke fresh fruit". Neil Taylor, an Interbrand consultant, stated that the name was a variant on the avocado fruit.
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